Single-family housing starts rose 2% to 438,000 units on an annualized basis during August, but multifamily construction soared by 53% during the month, according to new government figures released Tuesday morning.
The comparison – based on figures compiled by the U.S. Census Bureau and Department of Housing and Urban Development (HUD) – is to the same month a year ago.
In the multifamily space builders broke ground on 147,000 units (annualized) compared to 103,000 in July and just 96,000 in August of 2009.
The figures suggest that builders believe American consumers may be shifting to rentals as opposed to home ownership, despite historically low mortgage rates and falling home prices.
Total housing starts (encompassing single- and multifamily) rose 10.5% in August on a sequential basis to 598,000 units. Compared to the same month a year earlier total starts rose 2%.
Single-unit starts rose slightly from July but fell 9% compared to August 2009.
The improvement in starts comes a day after the National Association of Home Builders (NAHB) said builder confidence in housing remains low with the trade group's chief economist David Crowe declaring, "The stall in the nation's housing market continues."
NAHB's sentiment that home builders remain pessimistic about both a recovery in the housing market and new home sales is based on a September survey conducted by both the NAHB and Wells Fargo.
"In general, builders haven't seen any reason for improved optimism in market conditions over the past month," added Crowe.
During the housing boom, the NAHB/Wells Fargo housing market index hit a high of 72 in 2005. It fell to a low of eight in June 2009 following the bust, and hasn't scored much higher since.
The NAHB/Wells Fargo index shows the new home market "remains stuck in the doldrums," said Mike Larson, a real estate analyst at Weiss Research.
Meanwhile, Lennar Corp. president and chief executive Stuart Miller told investors and analysts that he remains cautious about the immediate future.
"It has become clear the recovery in the housing market will continue to be a rocky and sloppy stabilization process that will ultimately give way to an improvement in the market," he said. "But the timing and degree of improvement remain uncertain."
Nevertheless, the Miami-based builder reported another profitable quarter and the CEO said he expects the company will be profitable going forward.
In its earnings report, Lennar Corp. said sales of new homes were basically unchanged at 2,909 units in its third fiscal quarter, which ended Aug. 31, compared to the previous quarter. However, new orders fell 18% during this time.